Baku. 18 April. REPORT.AZ/ With the apparent failure of the meeting to forge a consensus to freeze oil production at January levels, as Saudi Arabia and Iran ‘torpedo-ed’ the discussion even before the meeting, oil futures slumped over 5% in retaliation.
Saudi Arabia deputy Crown Prince Mohamed bin Salman reiterated that the country would only be a party to any oil freeze pact if all major producers including Iran are in agreement. Meanwhile, Iranian deputy oil minister said the nation saw no reason to participate in the talks because it is committed to raise production to pre-sanction levels.
Expectations for the talks to end with an agreement were high. Furthermore, the lack of one damaged the credibility of future meetings to support the oil market. Russian energy minister, Alexander Novak, told Bloomberg although he believed there was a possibility of a future accord, Russia ‘would not be as optimistic as before’.
This suggested that the rally in oil prices since January could be running out of steam really soon, as much of this resurgence was due to expectations that global oil producers will undertake supply-side measures to boost flagging oil prices.
Asia is set for a negative start to the week, given this development. Commodities are expected to be beaten back today, and this would have consequences for equities, especially energy and material counters. On the data front, Singapore’s March non-oil domestic exports (NODX) missed expectations, falling 15.6% y/y against -9.1% consensus, and rose +0.2% m/m versus +0.3% expected. Electronic exports shrank 9.1% y/y.
Last week, the Monetary Authority of Singapore (MAS) eased its policy stance by moving to a zero percent appreciation in theSGD, citing a more modest pace of economic expansion this year, as well as a more gradual pick up in core inflation. The weak export data corroborated with the monetary policy action.
Analytical Group of Report News Agency believes that the oil prices starting from the third quarter, again could begin to fall to the level of 30 USD / barrel. Indicators from the global economy that support China , US unemployment figures falling down to the minimum level in the last 73 years, global financial markets will lead to a positive trend to continue for a while. Currently, the only thing that may make a significant impact on the world economy is the decision by US Federal Reserve System (FRS) to increase the discount rate. If the rate will increase in June, changing the negative trend in the global financial markets will move in that direction.